Exam 1: Wholly Owned Subsidiaries: at Date of Creation

The two manners in which a business may expand or diversify are _________________________________ expansion and _________________________________ expansion.

Consolidated financial statements constitute the ______________________________ financial statements of companies having one or more subsidiaries, that is, the statements to be furnished to a parent's stockholders in such situations.

_____ A parent generally will not consolidate a subsidiary that

_____ The economic resources (normally) that underlie the parent's investment in a subsidiary are the subsidiary's

_____ A home office, month-end allocation of previously recorded advertising expenses to a branch requires the following entry on the branch's books to record the allocation: Debit Credit

The idea of consolidated statements is to disregard the separate legal entity status of each company.

_____ The disaggregated reporting format of presenting a subsidiary's financial statement amounts in the consolidated statements would not serve any useful purpose when the subsidiary is

_____ A parent generally will not consolidate a subsidiary that

_____ Paxco, a publicly owned company, controls Saxco (parent created). Consolidation of Saxco is not required if

Before expanding, management must decide whether it wants to organize the new operation as a(n) ______________________________ or a(n) _______________________________________

Conceptually, consolidation is essentially a(n) _________________________________ process.

Under current GAAP, a banking subsidiary of a parent company that is a manufacturing company need not be consolidated.

_____ In a disaggregated consolidated balance sheet, the subsidiary's individual assets are

A branch that maintains a general ledger is said to use a(n) ____________________ ______________________ accounting system.

A general ledger is not used or maintained for the _____________________________.

A subsidiary can be consolidated only if the subsidiary's year-end is within three months of the parent's year-end.

A subsidiary that has just filed for bankruptcy reorganization usually would not be consolidated.

The consolidation rules of the Securities and Exchange Commission apply to all U.S. corporations.

When a consolidated subsidiary of a publicly owned company is restricted from transferring funds to its parent as a result of borrowing arrangements or regulatory restraints, the parent must disclose such restrictions in the notes to the consolidated statements only if the subsidiary's total assets exceed 25% of total consolidated assets.

_____ A valid reason for not consolidating a subsidiary is